Independent Power ProducersCoalition of MichiganPURPA Technical Advisor Committee

Michigan Public Service CommissionFebruary 3, 2015

IPPC

Small QFs (=<20 MW)

Hydro Biomass Waste-to Energy

Boyce Hydro… 10.50 MW Hillman Power… 18 MW Kent County… 17 MW

Elk Rapids Hydro… 0.76 MW Viking/Lincoln… 18 MW Landfill gas

White’s Bridge… 0.75 MW Viking/McBain… 18 MW Granger… 40 MW

Tower-Kleber… 2.86 MW (8 facilities all <20 MW)

City of Beaverton… 0.96 MW

2

IPPC

• Ancillary benefits

• Energy value

• System benefits

• Capital requirements

• QF technologies• Hydroelectric

• Landfill gas

• Waste to energy

• Biomass

3

Ancillary benefitsEnvironmental

• Carbon mitigation• Emission profiles• Waste management

Resources• Forest health & stewardship• Flood control• Habitat

Social• Local jobs, local resource• Tax base, property value• Recreation

4

Energy values• Renewable

• Clean Power Plan (CPP / Sec. 111(d))

• Michigan Renewable Portfolio Standards (RPS)

• Fuel diversification• Biomass

• MSW

• Water

• LFG

• Baseload• Capacity factor

• Availability

5

System benefits• Source diversification

• By fuel• By ownership

• Capacity• Grid reliability

• Voltage support• VARs

• $1 million annual value*• Distributed generation• Minimize impact of transmission outages

• Baseload• Up to 90%-plus capacity factor

• Dispatchable

*Source: NEMA.org – based on 100 MW installed capacity

6

Capital requirements• New or existing facilities

• Both have on-going CapEx, financeability needs

• Cost recovery over time

• Similar needs as utilities

7

HYDROELECTRIC POWER

Independent hydro facilities

9

Entity PlantCapacity (kW)

PPA expires Customer

Boyce Hydro Power, LLC Edenville 4800 2022 CECo.Boyce Hydro Power, LLC Smallwood 1200 2022 CECo.Boyce Hydro Power, LLC Sanford 3300 2022 CECo.Boyce Hydro Power, LLC Secord 1200 2022 CECo.Black River Ltd Partnership Alverno 1100 2016 CECo.Tower Kleber Ltd. Partnership Kleber 1200 2016 CECo.Tower Kleber Ltd. Partnership Tower 560 2016 CECo.Commonwealth Power Irving 600 2018 CECo.Commonwealth Power Middleville 350 2018 CECo.Commonwealth Power LaBarge 850 2017 CECo.Northbrook Energy LLC Fallasburg 900 2016 CECo.Thornapple River Assn ‐Northbrook Ada 1100 2017 CECo.Northbrook Energy LLC Morrow 880 2018 CECo.Cascade Twp ‐ operated by Northbrook Cascade 1600 2019 CECo.Elk Rapids Hydroelectric Power Elk Rapids 700 2019 CECo.Michiana Hydoelectric Bellevue Mill Dam 60 2020 CECo.City of Beaverton Beaverton 960 2020 CECo.White's Bridge Hydro White's Bridge 775 2016 CECo.Hope Renewable Energy, LLC Hubbardston 412 2017 CECo.Renewable World Energies Belding Dam 280 2016 CECo.

Total capacity 22,827

Northbrook Energy LLC French Landing – Belleville 1650 DTEYpsilanti Twp Ford Lake ‐ Rawsonville Rd. 1920 DTECity of Ann Arbor Barton Dam 900 DTECity of Ann Arbor Superior Dam 500 DTE

Total capacity 4970

HYDRO

The power of moving water• Domestic & Secure

• Water supply not subject to disruption• Foreign supply• Costs & economics• Fuel transportation

• Renewable – sustainable, not depleted, natural energy in falling water• Efficient – 85-90% overall vs. ~40%• Clean

• No air emissions or toxic byproducts• CPP eligible

• Small hydro plant rehabilitations• Pioneered renewable energy movement in 1980s

10HYDRO 10

Bellevue Mill: 45 kW (20-50 homes)

AfterRestored: 1977*Electrified: 1982PPA: Consumers Energy*On going

BeforeBuilt: 1854Abandoned: 1955Pictured: 1975

HYDRO 11

BeforeBuilt: 1916CECo.: 1950Scrapped: 1965Pictured: 1984

AfterElectrified: 1984PPA: CECo.

Elk Rapids: 700 kW (400-700 homes)

HYDRO 12

Ancillary benefits

• Waterfowl, fish habitat• Recreational lakes• Public access• Flood control• Enhanced property value, tax base• Blocks upstream migration of invasive species• Employs operators, skilled trades, suppliers and services

13HYDRO

Energy value• Carbon-free = Sec. 111(d) / CPP compliant• No air emissions• Not reliant on fuel availability / cost• Predictable, controllable schedule, continuous

HYDRO 14

System benefit• Baseload power

• Continuous, steady, reliable• Distributed generation• Rapid demand response

• Faster than fossil fuel power plants• Capacity factors +/-60%• Black start capability• Brick-and-mortar capacity, infrastructure

• Reduces transmission, energy import needs• 100+ year life span vs. 30-60 for fossil fuel, nuclear

• Operation not affected by fuel cost/availability

15HYDRO

Capital requirements• Regulatory compliance

• Environmental• Public access, recreation• Dam security• Dam safety

• FERC, MDNR, MDEQ

16HYDRO

Capital requirementsFERC mandates: Environmental

• Water quality• Tailrace flow• Water level monitoring, reporting• Invasive plant species (impoundments)• Endangered species monitoring• Shoreline erosion monitoring, reporting, intervention

17HYDRO

Capital requirementsFERC mandates: Public access

• Road access, parking lots • Fishing platforms • Portage pathways & facilities• Boat ramps & docks• Toilet & trash facilities• Picnic tables & seating• Directional signage, warning signals• Safety barriers & railings• Handicap accessibility

18HYDRO

Capital requirementsFERC mandates: Security

• Physical assessments & evaluations• Cyber assessments & evaluations

19HYDRO

Capital requirementsFERC mandates: Safety

• Letter of Owner’s/Licensee’s Responsibilities and Obligations• Annual inspections & reports

• FERC & owner engineers• Independent consultant inspection & report (every 5 years)• Probable Maximum Flood (PMF) analysis

• High hazard classification dams• Construction solutions

• Potential Failure Mode Analysis• Annual spillway gate tests• Monthly inspections & reports on internal drainage• Earthen dam maintenance (annual)

• Vegetation, drainage systems• Emergency Action Plans (EAPs) updates

• Local and state emergency response exercises

20HYDRO

Capital requirementsExample: Boyce Hydro• Est. Probably Max. Flood cost …$10.5 M / 6 yrs.• FERC annual compliance

• 45-55% of annual revenue• Avg. revenues @ current CECo. rates …$1.8 million

21HYDRO

KENT COUNTY WASTE TO ENERGY FACILITYRenewable Energy For Michigan

Integrated solid waste management system

• Energy recovery• Single stream recycling• Landfill• Transfer station• Curbside and drop off facilities

WASTE TO ENERGY 23

A 25-year success story

• Commercial operation in February of 1990

• Solid waste management for 600,000 residents• Grand Rapids• Kentwood• East Grand Rapids• Wyoming• Grandville• Walker

WASTE TO ENERGY 24

Ancillary benefits• Processes up to 625 tons of municipal waste daily• Recovers energy from 185,000 tons MSW/year

• 25 percent of total Kent Co. volume• 90% reduction in volume

• Good paying jobs• 40 full-time employees• $4.5 million annual payroll

WASTE TO ENERGY 25

Energy value

WTE under the EPA Clean Power Plan• Excluded from Regulation

• Stack CO2 emissions do not count against state mass goals• EfW facilities do not have an emission rate requirement

• Eligible to generate Emission Rate Credits (ERCs)• New capacity added after 2012 can generate ERCs for states with

rate-based plans

WASTE TO ENERGY 26

System benefits

• 15 MW of renewable, baseload electricity• 11,000 Kent County homes

• Equal to East Grand Rapids and Walker combined

• 90 percent capacity factor• Reliable baseload

WASTE TO ENERGY 27

Capital requirements

• $65 million investment• Todays cost: $156 million

• $4 million investment in 1999• Emissions reductions retrofit• New federal air emission

requirements

WASTE TO ENERGY 28

Capital requirements

Plant refurbishment

• 2011 – 2015 Actual: $7,139,420• 2016 – 2018 Budgeted: $8,722,652

Total $15,862,072

• 2019 – 2021* ?????????**

* Power Purchase Agreement expires with Consumers Energy in February 2022** Year-to-year agreements to sell electricity = no capital expenditure planning

WASTE TO ENERGY 29

LANDFILL GAS

Granger profile

40 MW• Granger Electric – 15 MW

• Ottawa, Byron Center, Grand Blanc I & Pinconning

• Granger Electric of Michigan – 12.6 MW• Grand Blanc II, Brent Run & Watervliet

• Granger Electric of Lansing – 12 MW• Lansing, plant 1 & Lansing plant 2

LANDFILL GAS 31

Ancillary benefits• Michigan-made energy

• Built & operated• Local fuel resources• Local labor

• Energy recovery from waste

LANDFILL GAS 32

Energy value• Michigan RPS & CPP qualified• “Matches” utility fossil fuel generation sources

• Brings “value added” of distributed baseload renewable power

• Baseload

LANDFILL GAS 33

System benefits• Fuel diversification• High capacity factor

• 60% to 95%

• Demand response capabilities• Dispatchable• Distributed generation

• Supports distribution with VARs• Transmission system extensions• Voltage stability

LANDFILL GAS 34

Capital requirements• LFG as capable as combined cycle natural gas

• Continuous generation• High capacity factor

LANDFILL GAS 35

Capital requirementsStandard capex• 3.2 MW system

LANDFILL GAS 36

YEAR DESCR CAPEX (Millions $)0.0 Initial construction 6.003.0 Compliance modifications 0.105.5 Major engine overhaul 0.608.0 Fuel processing mod replacement 0.2511.0 Engine (major) overhauls 0.6013.0 Mechanical modifications 0.3016.5 Engine (major) overhauls 0.6519.0 Electrical modifications 0.2522.0 Engine (major) overhauls 0.7024.5 Compliance modifications 0.2527.5 Engine (major) overhauls 0.7030.0 Fuel processing mods 0.25TOTAL 10.65

BIOMASS

Michigan PURPA biomass facilitiesCadillac Renewable Energy 36 MWGenesee Power Station 36 MWGrayling Generation Station 36 MWHillman Power Co. 18 MWTES Filer City 6 MW eq.Viking Energy of Lincoln 18 MWViking Energy of McBain 18 MW

38BIOMASS

Ancillary benefits• Home-grown, Michigan-made energy• Waste management

• Waste wood… 2.3 million tons• Scrap tires... 6.2 million PTEs

• 59% of all scrap tires generated• Railroad ties… 200,000 tons

• Forest stewardship• Timber management (thinnings)• Disease & infestations (sanitation)• Habitat development

• Local economics• 700 jobs• $60 million annual fuel purchases & wages• Millions in local tax revenues

39BIOMASS

Energy valueWaste-based feedstock = carbon neutral

• Eligible for CPP state implementation plans (SIP)• EPA McCabe memo

• Michigan’s RPS• 32% of all compliance RECs, 2014 (Est.)

40

20122013

BIOMASS

System benefits• Baseload, dispatchable

• “Stored” energy = fuel• On-site• On the stump

• Regional grid support• Voltage stabilization• VARs• Grid reliability

• Replaces need for transmission build-out

• Diversification• Hedge on commodity fuels

41BIOMASS

System benefit2014 availability

• Hillman Power Co. ….93.10%• Viking Energy of Lincoln ….97.00%• Viking Energy of McBain ….96.60%• CECo. / DTE ave.* ….81.89%

* 2014 PSCR Plan ‐ Case U‐17317, as revised and corrected

42BIOMASS

Production History Viking Energy of McBain

43

88.0

90.0

92.0

94.0

96.0

98.0

100.0

102.0

104.0

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

% C

apac

ity

Historical Capacity TrendCapacity Factor

Capacity Average

System benefit

BIOMASS

Capital requirements• Same maintenance & capital needs as utility

• Fuel handling• Boiler• Turbine/generator• Interconnection

• PPA terms = recovery of capital investment

44BIOMASS

Capital requirements

Deferred capital investments• Hillman Power Co. ……..$2.0 million

• Boiler overhaul

• Viking Energy of Lincoln …..$1.2 million• Major turbine overhaul

• Viking Energy of McBain ….$0.5 million• Generator overhaul

45BIOMASS

Major Projects 2011 – 2015 Viking Energy of McBainProject Description In-service Date Cost Depreciation Truck Dump Cylinder Replacement 2/23/2011 $ 31,564 10 YearStach Replacement 5/25/2011 $ 125,000 20 YearGrate Overhaul 5/25/2011 $ 220,925 20 YearID Fan Damper Replacement 5/17/2012 $ 14,597 20 YearRadial Stacker 5/22/2012 $ 160,158 20 YearCirculating Water Pump Rebuild 7/1/2012 $ 13,398 10 YearRebuild Boiler Feedwater Pump 1 7/1/2012 $ 38,170 10 YearRebuild Metering Bin Augers & Bearings 5/17/2012 $ 92,022 10 YearPrecipitator Transformer Replacement 2/7/2013 $ 31,333 20 YearElectromatic Relief Valve 5/24/2013 $ 35,941 10 YearCooling Tower 1 & 2 Gearbox Replacement 5/24/2013 $ 42,048 20 YearCooling Tower Dry Pipe 5/24/2013 $ 31,727 20 YearBoiler Water Washing Windows 5/24/2013 $ 32,951 20 YearPrecipitator Transfer Conveyor Overhaul 5/24/2013 $ 23,658 10 YearTurbine Overhaul & Modification 5/24/2013 $ 1,182,709 10 YearStoker Grate Drive Replacement 10/24/2013 $ 40,495 20 YearCondenser Partial Retube (Air Removal Section) 10/24/2013 $ 48,573 20 YearCooling Tower Efficiency Improvements 5/18/2014 $ 120,705 15 YearAsh Reinjection Piping Replacement 5/18/2014 $ 19,823 3 YearStation Batteries Replacement 5/18/2014 $ 33,942 20 YearA High Incline Conveyor Belt 6/30/2014 $ 47,441 10 YearTurbine Stop Valve Overhaul 5/16/2014 $ 12,323 5 YearBoiler Grate, Complete 3 year Overhaul 5/18/2014 $ 293,588 3 YearUPS Inverter Replacement 5/15/2015 $ 20,791 20 YearBoiler Feed Pump Recirc Valve Replacement 5/15/2015 $ 49,500 20 YearData Historian & Control Upgrade 5/15/2015 $ 70,000 20 YearCreosote Storage Shed & Fencing 7/31/2015 $ 250,000 20 Year

TOTAL $ 3,887,057

Capital requirements

BIOMASS 46

IPPC Summary• System benefit

• Reliable, baseload, dispatchable• Diversification, distributed generation• Grid support

• Capital requirements• New or existing have on-going capital costs

• Same as utilities / must be recoverable through avoided costs, PPAs

• Energy value• Renewable energy resource (RPS)• CPP (Sec. 111(d)) applicable

• Ancillary benefits• Environmental, economic, social

47

Conclusions• A reasonable capacity component in Avoided Cost is

appropriate, reasonable and prudent• Avoided cost should be based on next-planned addition

• Combined cycle natural gas

• Avoided cost must be long term• Avoided cost is not just incremental energy cost (or LMP)

48